Tesla Stock Is Rising Ahead of Earnings and Amid Coronavirus Concerns in China – Barron’s

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Tesla stock was rising Tuesday afternoon, a day before the electric-car makers fourth-quarter earnings report and in the face of concerns over the outbreak of coronavirus in China.

Wedbush analyst Dan Ives wrote in a note Tuesday that the outbreak comes at a crucial time as the company ramps up its manufacturing plant in China. After the Lunar New Year, he doesnt see a major disruption for Tesla.

In a worst-case scenario, he sees about 6,000 to 10,000 deliveries being pushed from the current quarter into the quarter ending in June. That wouldnt be a big difference for the Tesla bull thesis, according to Ives.

We also note that Tesla has been notifying customers in China that all Tesla vehicles will have free supercharging to facilitate travel until the outbreak is resolved, a smart strategic move in our opinion, he wrote.

China is becoming increasingly important to Teslas long-term growth. To tap into the growing Chinese EV market, and avoid import tariffs, Tesla began manufacturing cars at its new Shanghai Gigafactory 3 plant last month.

Ives thinks the China opportunity is worth at least $100 a share, or $300 in his bullish scenario. He wrote that China, along with Model 3 demand and Europe, will be keys for Teslas growth.

The stock has been soaring, rising as high as $594.50 at one point in Januarya 236% gain from its lowest point in early June. After slipping more recently, it was up 1.6% to $566.75 on Tuesday, while the S&P 500 index was up 1.3%.

Ives maintained a Neutral rating with a $550 price target, calling 2020 a pivotal year for CEO Elon Musk, with Wednesdays earnings release likely a major step forward.

Write to Connor Smith at connor.smith@barrons.com

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Tesla Stock Is Rising Ahead of Earnings and Amid Coronavirus Concerns in China - Barron's

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